Question 1

In a business cycle recession, which of the following occurs?

Accepted Answer

A)  Investment demand increases and the demand for loanable funds curve shifts rightward. 
B)  Investment demand decreases and the demand for loanable funds curve shifts leftward. 
C)  The quantity of investment demanded increases and there is a movement down along the demand for loanable funds curve but no shift in the curve. 
D)  The quantity of investment demanded decreases increases and there is a movement up along the demand for loanable funds curve but no shift in the curve. 
E)  The quantity of investment demanded decreases and there is a rightward shift of the demand for loanable funds curve. 
A)  Investment demand increases and the demand for loanable funds curve shifts rightward. 
B)  Investment demand decreases and the demand for loanable funds curve shifts leftward. 
C)  The quantity of investment demanded increases and there is a movement down along the demand for loanable funds curve but no shift in the curve. 
D)  The quantity of investment demanded decreases increases and there is a movement up along the demand for loanable funds curve but no shift in the curve. 
E)  The quantity of investment demanded decreases and there is a rightward shift of the demand for loanable funds curve.

Question 2

The total amount spent on new capital goods is called

Accepted Answer

A)  net investment. 
B)  gross investment. 
C)  depreciation. 
D)  financial capital. 
E)  wealth. 
A)  net investment. 
B)  gross investment. 
C)  depreciation. 
D)  financial capital. 
E)  wealth.

Question 3

The demand for loanable funds curve shifts rightward when

Accepted Answer

A)  the real interest rate rises. 
B)  the real interest rate falls. 
C)  expected profit increases. 
D)  expected profit decreases. 
E)  wealth rises. 
A)  the real interest rate rises. 
B)  the real interest rate falls. 
C)  expected profit increases. 
D)  expected profit decreases. 
E)  wealth rises.

Question 4

Ford Motor Corporation is considering purchasing new technology that will increase productivity by twenty percent.If Ford Motor Corporation decides to make this investment at the going real interest rate, then

Accepted Answer

A)  the quantity of loanable funds demanded increases. 
B)  the supply of loanable funds increases. 
C)  the demand for loanable funds increases. 
D)  Ford's profits will decline. 
E)  saving increases. 
A)  the quantity of loanable funds demanded increases. 
B)  the supply of loanable funds increases. 
C)  the demand for loanable funds increases. 
D)  Ford's profits will decline. 
E)  saving increases.

Question 5

The Ricardo-Barro effect is based on the idea that ________ when the government has a budget deficit.

Accepted Answer

A)  people decrease their private saving 
B)  people increase their private saving 
C)  investment demand increases because expected future profits increase 
D)  investment demand decreases because of the higher real interest rate 
E)  people immediately increase their tax payments 
A)  people decrease their private saving 
B)  people increase their private saving 
C)  investment demand increases because expected future profits increase 
D)  investment demand decreases because of the higher real interest rate 
E)  people immediately increase their tax payments

Question 6

At the beginning of the year, United Delivery had trucks valued at $1.3 million.During the year, United Delivery purchased new trucks valued at $500,000.If the value of the trucks at the end of the year was $1.5 million, what is the amount of its net investment and its depreciation during the year?

Accepted Answer

Net investment is the change in the capi

Question 7

Suppose that there is an increase in disposable income and simultaneously an increase in the profitability of investment.As a result, the equilibrium real interest rate ________ and the equilibrium quantity of loanable funds ________.

Accepted Answer

A)  rises; increases 
B)  falls; increases 
C)  remains unchanged; increases 
D)  might rise, fall, or remain unchanged; increases 
E)  might rise, fall, or remain unchanged; decreases 
A)  rises; increases 
B)  falls; increases 
C)  remains unchanged; increases 
D)  might rise, fall, or remain unchanged; increases 
E)  might rise, fall, or remain unchanged; decreases

Question 8

The supply of loanable funds schedule shows that the

Accepted Answer

A)  higher the real interest rate, the greater the quantity of loanable funds supplied. 
B)  higher the real interest rate, the greater the opportunity cost of supplying loanable funds. 
C)  higher the real interest rate, the lower the opportunity cost of supplying loanable funds. 
D)  lower the real interest rate, the greater the quantity of loanable funds supplied. 
E)  higher the real interest rate, the more the supply of loanable funds curve shifts rightward. 
A)  higher the real interest rate, the greater the quantity of loanable funds supplied. 
B)  higher the real interest rate, the greater the opportunity cost of supplying loanable funds. 
C)  higher the real interest rate, the lower the opportunity cost of supplying loanable funds. 
D)  lower the real interest rate, the greater the quantity of loanable funds supplied. 
E)  higher the real interest rate, the more the supply of loanable funds curve shifts rightward.

Question 9

"An increase in the real interest rate increases the quantity of investment." Is the previous statement correct or incorrect?

Accepted Answer

The statement is false.The int

Question 10

-In the figure above, the DLF curve is the demand for loanable funds curve and the PDLF curve is the private demand for loanable funds curve.If there is no Ricardo-Barro effect, the figure shows a situation in which the government has a budget

Accepted Answer

A)  deficit of $1 trillion. 
B)  surplus of $1 trillion. 
C)  deficit of $0.5 trillion. 
D)  deficit of $1.5 trillion. 
E)  surplus of $0.5 trillion. 
A)  deficit of $1 trillion. 
B)  surplus of $1 trillion. 
C)  deficit of $0.5 trillion. 
D)  deficit of $1.5 trillion. 
E)  surplus of $0.5 trillion.

Question 11

When Bank of America finances your purchase of a new car, you are

Accepted Answer

A)  lending in the capital market. 
B)  borrowing in the bond market. 
C)  lending in the bond market. 
D)  borrowing in the loan market. 
E)  borrowing in the stock market. 
A)  lending in the capital market. 
B)  borrowing in the bond market. 
C)  lending in the bond market. 
D)  borrowing in the loan market. 
E)  borrowing in the stock market.

Question 12

Which of the following statements is correct?

Accepted Answer

A)  Gross investment minus financial capital equals net investment. 
B)  Net investment plus depreciation equals gross investment. 
C)  Net investment plus corporate profits equals gross investment. 
D)  Net investment is greater than gross investment. 
E)  Net investment minus depreciation equals gross investment. 
A)  Gross investment minus financial capital equals net investment. 
B)  Net investment plus depreciation equals gross investment. 
C)  Net investment plus corporate profits equals gross investment. 
D)  Net investment is greater than gross investment. 
E)  Net investment minus depreciation equals gross investment.

Question 13

-The figure above shows the loanable funds market. At an interest rate of

Accepted Answer

A)  4 percent there is a surplus of loanable funds. 
B)  4 percent there is a shortage of loanable funds. 
C)  8 percent the quantity of loanable funds supplied is $14 trillion. 
D)  8 percent the quantity demanded of loanable funds is $18 trillion. 
E)  6 percent savers will exit the market because the reward to saving is too low. 
A)  4 percent there is a surplus of loanable funds. 
B)  4 percent there is a shortage of loanable funds. 
C)  8 percent the quantity of loanable funds supplied is $14 trillion. 
D)  8 percent the quantity demanded of loanable funds is $18 trillion. 
E)  6 percent savers will exit the market because the reward to saving is too low.

Question 14

If there is no Ricardo-Barro effect, an increase in the government budget surplus

Accepted Answer

A)  decreases private saving. 
B)  increases private saving. 
C)  decreases the supply of loanable funds. 
D)  increases the supply of loanable funds. 
E)  has no effect on the demand for loanable funds, the supply of loanable funds, or the real interest rate. 
A)  decreases private saving. 
B)  increases private saving. 
C)  decreases the supply of loanable funds. 
D)  increases the supply of loanable funds. 
E)  has no effect on the demand for loanable funds, the supply of loanable funds, or the real interest rate.

Question 15

At the beginning of the year, AAA-1 Towing owns trucks and buildings for a total value of $1 million.During the year, it invests $250,000 to replace towing trucks worth $230,000 destroyed in a flood and to cover $50,000 worth of depreciation.AAA-1 Towing's net investment was

Accepted Answer

A)  $200,000. 
B)  $20,000. 
C)  $280,000. 
D)  -$30,000. 
E)  $250,000. 
A)  $200,000. 
B)  $20,000. 
C)  $280,000. 
D)  -$30,000. 
E)  $250,000.

Question 16

Which of the following occurs if the expected profit increases?

Accepted Answer

A)  Investment demand increases and the demand for loanable funds curve shifts rightward. 
B)  Investment demand decreases and the demand for loanable funds curve shifts leftward. 
C)  The quantity of investment demanded increases and there is a movement down along the demand for loanable funds curve. 
D)  The quantity of investment demanded decreases and there is a movement up along the demand for loanable funds curve. 
E)  The savings increases and the supply of loanable funds curve shifts rightward. 
A)  Investment demand increases and the demand for loanable funds curve shifts rightward. 
B)  Investment demand decreases and the demand for loanable funds curve shifts leftward. 
C)  The quantity of investment demanded increases and there is a movement down along the demand for loanable funds curve. 
D)  The quantity of investment demanded decreases and there is a movement up along the demand for loanable funds curve. 
E)  The savings increases and the supply of loanable funds curve shifts rightward.

Question 17

A certificate of ownership and claim to part of a firm's profits is called

Accepted Answer

A)  a stock. 
B)  a bond. 
C)  a certificate of deposit. 
D)  depreciation. 
E)  physical capital. 
A)  a stock. 
B)  a bond. 
C)  a certificate of deposit. 
D)  depreciation. 
E)  physical capital.

Question 18

A household increases its wealth by

Accepted Answer

A)  spending more on consumption goods. 
B)  saving. 
C)  increasing its capital consumption. 
D)  decreasing its depreciation. 
E)  making sure that its net investment exceeds its gross investment. 
A)  spending more on consumption goods. 
B)  saving. 
C)  increasing its capital consumption. 
D)  decreasing its depreciation. 
E)  making sure that its net investment exceeds its gross investment.

Question 19

Financial capital

Accepted Answer

A)  is accumulated investment. 
B)  is another name for the machines and tools that businesses buy. 
C)  is independent of physical capital. 
D)  depends on saving and borrowing decisions. 
E)  depreciates each year. 
A)  is accumulated investment. 
B)  is another name for the machines and tools that businesses buy. 
C)  is independent of physical capital. 
D)  depends on saving and borrowing decisions. 
E)  depreciates each year.

Question 20

assuming there are no capital gains, a nation's wealth at the start of a year is equal to the wealth at the start of the previous year plus

Accepted Answer

A)  nothing because wealth does not change from one year to the next. 
B)  income. 
C)  saving during the year. 
D)  income minus saving during the year. 
E)  saving minus depreciation during the year. 
A)  nothing because wealth does not change from one year to the next. 
B)  income. 
C)  saving during the year. 
D)  income minus saving during the year. 
E)  saving minus depreciation during the year.

In a business cycle recession, which of the following occurs?

The total amount spent on new capital goods is called

The demand for loanable funds curve shifts rightward when

Ford Motor Corporation is considering purchasing new technology that will increase productivity by twenty percent.If Ford Motor Corporation decides to make this investment at the going real interest rate, then

The Ricardo-Barro effect is based on the idea that ________ when the government has a budget deficit.

At the beginning of the year, United Delivery had trucks valued at $1.3 million.During the year, United Delivery purchased new trucks valued at $500,000.If the value of the trucks at the end of the year was $1.5 million, what is the amount of its net investment and its depreciation during the year?

Suppose that there is an increase in disposable income and simultaneously an increase in the profitability of investment.As a result, the equilibrium real interest rate and the equilibrium quantity of loanable funds .

The supply of loanable funds schedule shows that the

"An increase in the real interest rate increases the quantity of investment." Is the previous statement correct or incorrect?

-In the figure above, the DLF curve is the demand for loanable funds curve and the PDLF curve is the private demand for loanable funds curve.If there is no Ricardo-Barro effect, the figure shows a situation in which the government has a budget

When Bank of America finances your purchase of a new car, you are

Which of the following statements is correct?

-The figure above shows the loanable funds market. At an interest rate of

If there is no Ricardo-Barro effect, an increase in the government budget surplus

At the beginning of the year, AAA-1 Towing owns trucks and buildings for a total value of $1 million.During the year, it invests $250,000 to replace towing trucks worth $230,000 destroyed in a flood and to cover $50,000 worth of depreciation.AAA-1 Towing's net investment was

Which of the following occurs if the expected profit increases?

A certificate of ownership and claim to part of a firm's profits is called

A household increases its wealth by

Financial capital

assuming there are no capital gains, a nation's wealth at the start of a year is equal to the wealth at the start of the previous year plus

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Exam 10: Finance, Saving, and Investment

In a business cycle recession, which of the following occurs?

The total amount spent on new capital goods is called

The demand for loanable funds curve shifts rightward when

Ford Motor Corporation is considering purchasing new technology that will increase productivity by twenty percent.If Ford Motor Corporation decides to make this investment at the going real interest rate, then

The Ricardo-Barro effect is based on the idea that ________ when the government has a budget deficit.

At the beginning of the year, United Delivery had trucks valued at $1.3 million.During the year, United Delivery purchased new trucks valued at $500,000.If the value of the trucks at the end of the year was $1.5 million, what is the amount of its net investment and its depreciation during the year?

Suppose that there is an increase in disposable income and simultaneously an increase in the profitability of investment.As a result, the equilibrium real interest rate ________ and the equilibrium quantity of loanable funds ________.

The supply of loanable funds schedule shows that the

"An increase in the real interest rate increases the quantity of investment." Is the previous statement correct or incorrect?

-In the figure above, the DLF curve is the demand for loanable funds curve and the PDLF curve is the private demand for loanable funds curve.If there is no Ricardo-Barro effect, the figure shows a situation in which the government has a budget

When Bank of America finances your purchase of a new car, you are

Which of the following statements is correct?

-The figure above shows the loanable funds market. At an interest rate of

If there is no Ricardo-Barro effect, an increase in the government budget surplus

At the beginning of the year, AAA-1 Towing owns trucks and buildings for a total value of $1 million.During the year, it invests $250,000 to replace towing trucks worth $230,000 destroyed in a flood and to cover $50,000 worth of depreciation.AAA-1 Towing's net investment was

Which of the following occurs if the expected profit increases?

A certificate of ownership and claim to part of a firm's profits is called

A household increases its wealth by

Financial capital

assuming there are no capital gains, a nation's wealth at the start of a year is equal to the wealth at the start of the previous year plus

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Suppose that there is an increase in disposable income and simultaneously an increase in the profitability of investment.As a result, the equilibrium real interest rate and the equilibrium quantity of loanable funds .